EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1032751
Customs Act 1901
Background
Part XVA of the Customs Act 1901 (the Act) sets out a scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs (the CEO). A lower rate of customs duty applies to goods that are the subject of a TCO.
Under section 269F of the Act, a person may apply to the CEO for a TCO in respect of goods. If the CEO is satisfied that the application is not in respect of goods specified in section 269SJ of the Act, which sets out those goods that cannot be subject to a TCO, the CEO must decide whether the application meets the core criteria.
Section 269C of the Act provides that a TCO application meets the core criteria if, on the day on which the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269B of the Act provides that ‘goods produced in Australia’ has the meaning given by section 269D, ‘ordinary course of business’ has the meaning given by section 269E and ‘substitutable goods’ in respect of goods the subject of a TCO application, means goods produced in Australia that are put, or are capable of being put, to a use that corresponds with a use (including a design use) to which the goods the subject of the application can be put.
Subsection 269P(3) of the Act provides that if the CEO is satisfied that a TCO application meets the core criteria, the CEO must make a written order (a TCO) declaring that the goods the subject of the TCO application are goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (the Tariff) specified in the order applies.
Cyclone Industries applied for a TCO in respect of certain hand tool parts on 19 July 2010.
Instrument
TCO No 1032751 was made on 11 October 2010. It declares that those certain hand tool parts are goods to which item 50 of Schedule 4 to the Tariff applies since the CEO was satisfied that no substitutable goods were produced in Australia. The general rate of duty on these goods is 5%. The rate of duty for the goods subject to the TCO is free.
Consultation
Subsection 269K(1) of the Act provides in part that as soon as practicable after accepting a TCO application as a valid application, the CEO must publish a notice in the Gazette which includes an invitation to any person who considers that there are reasons why the TCO should not be made to lodge a submission with the CEO. The CEO did not receive any submissions in response to this invitation.
Commencement
Subsection 269S(1) relevantly provides that a TCO is to be taken to have come into force on the day on which the application for the TCO was lodged. TCO No. 1032751 is taken to have come into force on 19 July 2010.
The TCO does not affect the rights of a person (other than the Commonwealth) as at the date of registration so as to disadvantage that person or impose liabilities on a person (other than the Commonwealth) in respect of anything done or omitted to be done before the date of registration. The rights of importers will be beneficially affected. Under paragraph 126(1)(r) of the Regulations, importers of such goods will be able to apply for a refund of duty on goods imported since the day on which the TCO is taken to have come into force. The TCO does not impose any liabilities on any person.
Overview
The Tariff Concession Order No. 1032751, introduced under the Customs Act 1901, was enacted in 2010 to address the need for tariff concessions for specific goods not produced domestically. This instrument was created in response to an application from Cyclone Industries for certain hand tool parts, where it was determined that no substitutable goods were produced in Australia, meeting the core criteria as outlined in the Act. The Tariff Concession Order allows for these specific hand tool parts to be subject to a reduced customs duty rate, from the general 5% rate to a free rate, thereby benefiting importers by potentially allowing them to apply for a refund of duty paid on these goods since the date the order was lodged. The enactment of this TCO ensures that the rights of importers are positively impacted without imposing any new liabilities on non-Commonwealth entities.
Scope and Application
The Tariff Concession Instrument No. 1032751 made under Part XVA of the Customs Act 1901 applies to the importation of certain hand tool parts for which a Tariff Concession Order (TCO) was requested by Cyclone Industries. This legislation, administered by the Chief Executive Officer of Customs, facilitates the reduction or exemption of customs duty on specified goods, provided they meet certain criteria. The instrument specifies that these hand tool parts, which are subject to a duty rate of 5% generally, are to be treated under item 50 of Schedule 4 to the Customs Tariff Act 1995 with a duty rate of free, effective from the date of the application, 19 July 2010. The TCO applies nationally across Australia and is not restricted by state or territory boundaries. However, it excludes goods specified under section 269SJ of the Customs Act 1901, which are ineligible for tariff concessions. The process of making TCOs can be extended or refined through subordinate instruments, although this particular TCO does not incorporate such extensions. The instrument ensures that the rights of importers are positively impacted by providing them the opportunity to apply for a refund of duty paid on these goods since the effective date of the TCO, without imposing any new liabilities on any party.
Key Provisions
The primary operative sections of Tariff Concession Instrument No. 1032751 under the Customs Act 1901 (the Act) include sections 269C, 269F, and 269P. Section 269F allows for the application of a Tariff Concession Order (TCO) by a person to the Chief Executive Officer of Customs (CEO). If the CEO determines that the application meets the core criteria set out in section 269C, they must issue a TCO, as outlined in section 269P. This TCO specifies a lower rate of customs duty for the goods in question, in this case, reducing it to free from the general rate of 5% as per item 50 of Schedule 4 to the Customs Tariff Act 1995.
The Act imposes several obligations on the parties involved. For instance, when a TCO application is submitted, the CEO must determine if it meets the core criteria, which include ensuring that no substitutable goods are being produced in Australia at the time of application. If the criteria are satisfied, the CEO is mandated to issue a written TCO. Furthermore, the CEO is required to publish a notice in the Gazette inviting any interested parties to submit reasons why the TCO should not be granted. In this specific case, no submissions were received, allowing the TCO to proceed without opposition.
The legislation outlines potential consequences for non-compliance, although in this context, it mainly pertains to civil liabilities. For instance, the Act specifies that a TCO does not affect the rights of any person, except the Commonwealth, in a way that disadvantages them or imposes liabilities for actions taken before the TCO's effective date. However, it does entitle importers to apply for a refund of any duties paid on goods imported since the TCO's effective date, as per paragraph 126(1)(r) of the Regulations. Any breach of the terms set by the TCO could lead to civil consequences such as financial penalties or the requirement to pay the difference in duty rates retrospectively, although specific penalties are not detailed within the explanatory statement.